Astec Industries, Inc. (ASTE) Cash Flow Statement

The ten-quarter OCF/NI ratio averages above 1, but the 2026Q2 ratio of 1.05 is misleading because working capital consumed $22.1M, offset by $14.4M in D&A. This indicates that cash conversion is not consistently strong; rather, it is volatile and dependent on project milestones and inventory timing. Investors should monitor whether the persistent gap between net income and operating cash flow in quarters like 2024Q1 (OCF of -$47M vs. NI of $3.4M) signals structural issues in collections or cost overruns.

Despite accelerating revenue growth, FCF margins have been erratic, ranging from -17.1% to 8.9% over the past ten quarters. The 2026Q2 FCF of $3.6M is negligible relative to the $408.1M revenue, suggesting that the company is not converting top-line gains into cash. This volatility may indicate that the 'OneASTEC' transformation has not yet improved working capital efficiency, and the lowered guidance suggests near-term FCF may remain subdued.

The 2025Q4 CapEx of $28.7M is a clear outlier, representing a significant increase over prior quarters. This may indicate investment in new product lines or facility upgrades, but the subsequent quarters show CapEx returning to ~2% of revenue, implying the spike was one-time. The lack of a corresponding FCF improvement suggests that either the investments are still ramping or they are not generating expected returns, warranting close monitoring of future capital allocation.

The large swings in working capital, particularly in 2024Q1 and 2026Q2, suggest that Astec's cash flow is heavily influenced by the timing of large custom projects and dealer inventory levels. The 2026Q2 outflow of $22.1M may reflect inventory build-up for anticipated demand, but it also pressures cash conversion. Investors should assess whether these swings are normal for the business or indicate inefficiencies in collections or payables management.

The company's capital deployment is dominated by dividends, which are modest relative to net income, and there is no evidence of share repurchases or significant M&A. This conservative approach is consistent with the low debt-to-equity ratio, but it may also indicate a lack of high-return investment opportunities. The $67.8M acquisition outflow in 2026Q1 is notable, suggesting a strategic purchase, but its impact on cash flow and returns is not yet clear.

The cumulative OCF/NI ratio of 2.69 appears favorable, but it is skewed by large D&A and working capital swings. The gap between net income and operating cash flow is narrow, suggesting that earnings are not being converted into cash at a high rate. This divergence may indicate that the company is using aggressive revenue recognition or that cash is being tied up in working capital, which could pressure future liquidity if not managed.